Panic World - The sicko who invented prediction markets

Episode Date: July 22, 2026

Where did prediction markets come from, and why are they more popular than ever? Charlie Warzel joins the pod once again to discuss the proliferation of these strange companies like Kalshi and Polymarket that allow you to bet on nearly anything — monetizing the good, and mostly bad things. We go into the early 2000s background of these platforms, led by Robin Hanson, an economist and self-described “Jungian ENTP” who originally got involved with prediction markets through his “Policy Analysis Market” as a means to anticipate political instability and terrorist attacks; how they are used now; and whether we’re headed into Hanson’s desired “futarchy.” Our guest Charlie Warzel writes the Galaxy Brain newsletter and podcast. Subscribe to the newsletter here and check out the podcast here or wherever you listen. Learn more about your ad choices. Visit megaphone.fm/adchoices

Charlie, to start things off, where are you doing your insider trading right now? Is it Kalshi? Are you a polymarket? Do you like the cryptocurrency aspects of polymarket? Or you want to insider trade with cash? I'm fully decentralized. So it's polymarked. Polymarket with a couple of offshore accounts linked to it. Sure. Yeah. You can read more about that in my in my Discord. It's like $299 a month to subscribe, but you get a lot of alpha out of it. That makes sense because I'm one of the clippers.

in your discord for your show. And you're always paying us in like Doge or like, uh, tether recently. It seemed like, maybe something's wrong. I don't know, but some Solana. Solana. Yeah. Yeah. Welcome back to the show, Charlie.

How have you been? When was the last time you were on the show? I think you're in the three-timer club now. I, I was going to say. I think now, I think one more and I'm officially the host of the show. You can have. Leaving you of duties, which is pretty sweet. I don't know.

I think was the last time January. 6th or no last last time was Dave Portnoy right Dave Portnoy I forgot we even didn't have president-elect yeah Swampscout's finest um today we're talking about a different kind of sicko but first let me intro the show properly my name is Ryan Broderick with me as always is Grant Irving and this is Panic roll to show about how the internet warps our minds our culture and eventually reality and joining us I guess you are actually the second person to become a three-timer so you're not the first. Who's the other?

I don't know. But that's in my notes for the show today. It's Claude. Who is the first three-timer, Grant? It's Juniper. Oh, Juniper. Yeah, that makes sense. Yeah.

Okay. Well, that's fine. I could have phrased it nicer, but I didn't want Charlie to like leave here gloating, you know. Yeah, no, Juniper, the much better guest. Yes. She is the first three-timer. But Charlie Watersell, welcome. How are you?

Thank you. I'm good. I'm good. I'm ready to try to figure out how to, figure out how to quit my day job and really make some money. I think it's time. I think journalism can only go so far into reflecting reality and actually you should just fully go into the market. I think the market is really the only way to report on what's happening. I agree. You know, we're utilizing the comments to get to a better understanding of truth. So I think that's what it's all

about. In all seriousness, have you used one of these platforms, Calci, Polymercate, some other weird one. Have you used any of them before? Yeah, I mean, I did to sort of figure out what's up with it. So I made like a couple of like really stupid bets on golf stuff on Cal She just to sort of see. I'm not a big better. I like to win things. And I find it's just a great way to lose money. I don't know. I don't have a lot of money to begin with. So I'm trying not to like flush it down the toilet and like, let these very strange companies take, you know, 10, 15, 20 percent. Yeah, I've said this before. I don't have the gambling brain shape.

It just like doesn't work with me very well. I have used like crypto style wallets and stuff and I've messed around with them. And I've met a lot of people, you know, over the last few years at crypto events who are building what, you know, basically all got replaced by polymarket. So like I was sort of, I sort of knew the prediction market stuff was coming. as of like two or three or four years ago. But I have never actually met anyone that's using them either and openly talking about it, which I also think is interesting.

I will say the one thing I do like to do is go into the comments. Like find a good market and then go into the comments and especially a good market that has just resolved and look at the different people because every single time you go in, there are a number of people who are like, wait, that's what we were betting on? Like, are you serious? And it's like, I just lost $1,000. I had no idea that's what it meant when we were resolving to yes. Like they literally thought they were betting on the opposite thing.

So I just pulled one up. This one hasn't resolved yet. This is Polly Market. And it's Elon Musk's number of tweets from May 29th to June 5th, 2006, which is, I feel like if he knew, okay, well, whatever. And the top comment is in all caps, Elon, did you know Grock can. say N-words and other AI app can't say it laughing while crying emoji how cool is that's how cool is that's how cool is that's we're not sending our best i don't think you know i would like to believe

that that's a 14 year old but i actually think that you can't be 14 to be there like i think that they can sure you can it's this is the crypto one there's no rules uh that same user has the comment beneath that, which is once again in all caps, it says, Elon, I hope you release GROC 4.5 next week before 15th so we can use. And the user, their avatar is a dancing Pepe the Frog emoji. That's the CFO of Goldman Sachs, I believe. Yeah. Yeah. This is actually Michael Saylor. This is just what he does. It is free time. Do you know much about sort of the origins of prediction markets? I know that like it's starting.

it out as kind of an academic experiment, right? Like, I believe that like in the, this is again from research I did a long time ago, but like wasn't there somebody at some Midwestern university who was like trying to understand the wisdom of crowds, trying to understand like politics, or at least maybe like theorized on like how you could harness this? I don't know. You tell me.

Kind of here. Let me share my screen here. I'm gonna pull up an article in the register from 2003, which is titled Meet the Transhumanists behind the Pentagon Terror Casino. This is a sick band name, by the way. Pentagon Terror Casino? Pentagon Terror Casino goes very hard. And this is a line from this article,

if there was an otherworldly feel to the news last week that the Pentagon was investing in an online futures exchange to reward terrorist atrocities, so that's how that opens. And basically it explains that these terror casinos, or what we would now call prediction markets, were started by DARPA. So you're kind of right. Why do you think DARPA would be interested in something like this? I would guess that figuring out, I mean, I'm still hung up on Terra Casino. But I would guess that you would really is, that you would want to be able, like, prediction markets as.

as an information vector for weird things that are happening, like I could see that as sort of an alternate intelligence collection tool, right? That's sort of what I would gather something like, someone like DARPA or an agency like DARPA wanting to use that for. This is like an extremely like libertarian-brained idea, but they were basically trying to predict where terror attacks might happen after 9-11. Okay. And they thought that perhaps prediction markets could be a way to do that.

I, why are you laughing? I'm sort of foggy on like how that would work in practice. I just know like, like is, are they like, are they hoping that like al-Qaeda is like needs another form like income stream? Is that are they hoping that people are just going to start betting on this with a little of like, oh man, like, you know, we're planning on doing something in in March. Like let's let's hedge. this thing. The market is the guiding hand of society, Charlie. So if you believe in the market, it's fine. Yeah, but that's that's sort of, I mean, that was basically the idea is that like there were a bunch of guys that had joined DARPA and they were experimenting with transhumanism

and sort of information technology, prediction markets kept coming up. And the one guy in this group in the early 2000s that we're going to be talking about today is Robin Hanson. Are you familiar with the name no i'm very excited so robin hanson self-described on his blog at the time as a six-foot 185 pound 40-year-old well-educated married white male american with two children um uh describes himself is a jungian describes himself as a youngian type e n tp do you know what any of that means not really i'm not going to lie to you okay so the personality type is extroverted, intuitive, thinking, and perceiving. Okay.

I don't remember which one I am, because I don't care, but I'm, I'm Slytherin in Harry Parker, because he does, he, he explains that the, the young Ian type of ENTPs tend to be oblivious of the rest of humanity, except as an audience. That sounds like actually most podcasters in a way. Yeah, I mean, it's, it's, it's like the Andreessen Horwitz, uh, like, like, recruited profile. Yeah, basically. So another sort of member of this cohort working on prediction markets in the 2000s

insists that markets provide answers, answers that can't be collectively worked out for ourselves. And so they're aggregators of knowledge and a divine knowledge that we couldn't arrive at through any other means. Divine is interesting there. Yeah. That's a little. he's losing me he's losing me with the invocation of of the lord here's a bit more to the

quote markets do an awfully good job of forecasting many events and trends there is a good reason to believe that a market set up to forecast the sort of political instability that leads to terrorism might work well too it does just dawn on me though that like the market did not predict 9-11 No, Alex Jones did, though. Alex Jones did, yeah, of course. I guess I just like am not a libertarian, I guess I'm just not tapped into like the libertarian ethos enough to like really understand like how this could work. I don't really understand it either because so I mean, I'm probably jumping ahead too much

to where we're going at some point. But I feel like the whole point of of prediction markets, at least as they exist now in the in the common understanding, is this idea that like, if you gather enough people both with skin in the game, but also just with their own intuitions, over time, you get closer to the truth, right? Like, a very liquid prediction market is one with a ton of people who are putting money in.

And so, you know, like, it makes a lot of sense to me, or rather the most sense to me, with something like elections, right? Because everyone in a given country, you know, who is old enough and not disenfranchised, caveats. Yeah. You know, she is theoretically able to vote.

And so if you took a huge market of people who are going to vote in a certain thing, ask them to wager, you should then, you know, this like perfect world get something that is like close to the results, right? Like the idea of like sort of almost replacing polling, but also with the idea of people, you know, talking, thinking who should win, all that. And so I get that. I do not understand how you, like, it really feels like the underpants, gnome version of whatever, right?

It's like step one, create, you know, this like market to find political instability. Step three, accurate intel. It doesn't, doesn't track to me. Yeah. And we don't have like a ton of info on how these earlier prediction markets worked. And so perhaps it's not totally fair to apply. the way Kalshi or Polymarket works now to one of these. But I am trying to do it.

And my brain is just sort of like grinding gears, trying to imagine it. Where I'm like, if you open up a prediction market and you say, okay, you can make bets here on political instability around the world. Users would then do that. And so they'd be like, okay, like Libya is going to fall by. 2026 or we're doing it now where like you know the front page of polymarket is saying that the u.s and iran might have permanent have might have might have a permanent peace deal and then they have a bunch of dates listed out and then people bet on which date a permanent peace deal would be right you know solidified so in this situation would like DARPA or the pentagon

be looking at this data of like what random people are betting on on and be like, okay, then we can inform our foreign policy from that? Right. It seems to me to be the equivalent of at that moment in time being like, let's go into an AOL chat room and ask around, right? Let's pull the hive mind and see what they have to say, right? I mean, I can understand it as like, you know, have you seen the situation monitor apps that people have vibe coded to track in all these different forms of data,

and they feel like they have some really good understanding of the world because they have all these different inputs in them. And mostly it's just like people larping being in a situation room. I think that, like, I could see that in some kind of large, you know, CIA, Pentagon, whatever kind of flow of information where you're like throwing that into some kind of model, even way back then. and that is like one lightly weighted input, right? Where it's just sort of like,

and you've got a lot of people chattering about X, Y, or Z, give it, you know, 0.000% weight on your thing. But to use it as like an actual good source of Intel, it feels to me like you would need to be like, okay, well, we need a lot of Libyan participation. Right. That's what I would, exactly. Like, were you ever on the data miner train back in the day? A little bit, a little bit, yeah.

I briefly used it before like every app kind of shut off access to it. And for listeners who don't know, I'm talking about, data miner was this magical tool that basically let you kind of stare at the fire hose of social media across every platform that existed like 15 years ago. And it did feel like jacking into the matrix. And particularly during breaking news events, it was super useful because you could set like a geolocation and then in theory receive in a feed every public. update. So like I would use it for school shootings a lot. I bet okay like let's type in the school and then it's like every four square check in every Instagram post that's geo tagged every tweet that's geo tagged. And then through that you could find stuff you could sort of monitor the situation properly. You can't do that anymore and like no platform allows themselves other than blue sky,

which has fire hose access if you've ever used it. It'll melt your fucking face off but it's it's wild. And so I could see that. It's when you affect. factor in the betting aspects where I go, I don't understand how this is useful in any way. Like, I would rather just raw osent. Like, I would rather just like raw social media data because in my mind, it's like untainted. Well, this is the where the, the, the true wisdom of crowd stuff comes in, right? Because the idea is theoretically, like people who are willing to back something with dollars with their livelihood, theoretically essentially, assigns a higher level of certainty to it, right?

Like you're. Yeah. And so I get that. But yes, intelligence and betting are are completely opposite things, because one is just is just like ground truth that you can analyze and a lot of noise with which you can maybe determine a signal. And the other is a bunch of people playing, like doing game theory essentially, right? Like trying to figure out what the optimal outcome is.

is of a given situation. And in so doing, it's like people betting against what they think the common wisdom is so that the returns are better and everything. And what you end up getting is like, I think, a way more skewed picture. I wouldn't even call it a picture. It's so fundamentally confusing to me that I just don't think it makes sense. And I don't think it'll come as a surprise when I say that Robin Hansen, the Godfather of prediction markets, had some sort of.

some pretty kooky beliefs. And before we go to a break, I would love for you to guess what kind of sicko Robin Hanson is. Hmm. Is he like a repeal, no fault divorce guy? Like, is he sort of like... We're going to find out right after a word from our sponsors, Draft Kings.

Hell yeah. Bet normal. Yeah. Bet in a normal. cool way. I do think prediction markets have made me more supportive of casinos and casino environments in physical spaces. I actually think that like we should have more casinos. Because you used to have to go to the degenerate store. Right. Yeah. The closer you get to the most risky thing, which is a slot machine, right? Yes. Which is like they could be illegal. I think should be illegal. Yeah. Slot machines can be

rigged. They are rigged. Digital ones definitely are rigged. Yeah. But There's all kinds of like basically ways that it goes from some kind of skill and some kind of like mitigation of risk to like zero skill and total risk. And what these like betting apps have done and anything that's like in your phone, anything that brings a casino to you, reducing all that friction, most of what they are selling is closer to the slot machine version of risk, right? Yeah. It's closer to that.

and it's more abstract in this way. And then if you get to prediction, if you get to prediction markets, I think the fundamental lie that sort of supports the entire prediction market industry is that if you know more about the world, you can make a better prediction and a better bet. And not only do I think that's wrong because prediction markets don't reflect reality, they're also a way to allow completely unfettered insider trading. so you're competing against someone who does know what's going to happen in a lot of cases. And none of this was really considered by Robin Hansen, the sicko who created this whole world we live in.

And before the break, you said that maybe he was some sort of like no-fault divorce guy. Like what is it? Like what's the court you go to? Oh, yeah, like a custody court guy, you know? He is not. He's a more complicated weirdo. Have you ever heard the term futarky or futurkey? or futarchy?

No. Okay. You sound excited to learn. Terrified. So I googled it and I am only looking at the auto completes and Robin Hanson's name is first. It's Foo-Tarky Robin Hanson. Well, he invented the concept.

He invented the concept. Okay. He created it in the mid-2000s. The New York Times sort of jumped on at the time and then it was kind of lost. It was lost to time, but it comes back in the 2010s in a way we'll get to in just a second. So let's define it first. Foo-Tarki proposed by economist Robin Hansen is defined by elected officials who use prediction markets to determine policies that will have the most positive effect on the population.

And it is also a type of society run by blockchains and decentralized autonomous organizations or dows, and it's a portmanteau of future and anarchy. Okay. So what are you- Sounds like porn. Like it sounds like a porn category. Futarchy. Yeah, actually it does.

When I say it out loud, it definitely does sound like that. Yeah. What kind of porn are you imagining? Let's not go down that road. Grant. What are your sort of initial, what are your, Charlie, what are your kind of initial gut reactions to when I say, oh, like these guys wanted to build a society run by prediction markets and built on top of

blockchains and dows. What are your sort of thoughts there? A couple. The first thing that pops into my head is that these guys, like, they all must be in the big AI labs now, or at least like the descendants of this, like must be in polycules in, you know, the Bay Area, like posting on less wrong and doing like, you know, um, strange AI safety stuff. The other is that they must be really fun to talk to. Again, it must be really awesome to get cornered at a party by these guys. We're going to talk about what Robin Hanson's been up to recently.

He's still with us. He's still alive. I will say he had a bit of a side quest into the cryonics or cryogenics movement for a while. and he's come back out as a prediction market guy. I think, you know, he's trying to be part of the, he's trying to be part of the victory lap there to mix results. And he's written a couple different books. His last one is probably not going to be shocking to you.

It's called The Elephant in the Brain. And it's basically kind of like a thing about like mental health and how, you know, There's questions that we should be asking about how we treat mental health. Oh. He also, just asked this, okay, we're going to get there, but this dude fucking loves asking questions. He loves it. And he also wrote a book called The Age of M, which is a like sort of speculative nonfiction book, which the subtitle of that is work, love, and life when robots rule the earth.

And that love there is, I think, a perfect transition. to talk about what Robin Hansen's been up to recently. But before we get there, I just want to sort of say that his futarky idea did not just die. It didn't just disappear. It disappeared for a little bit. But in 2014, it came back. And can you guess who revived the idea of futarky and was very excited about it circa 2014? Is it total guess?

Is it a ballagy, the Andrews and Horowitz guy, who's like the C-steading kind of. You are on the right track for sure. Let me share my screen with you so you can see this in all its glory. So this is Vitalik Boutarin of Ethereum. Yeah. He's very excited about Futarki. And he even came back to it in 2024 on his website.

Sort of talking about how we're like with prediction markets like calcium and polymarket, very good. close to a futarkal society. Hit my favorite Vitalik thing is that he wanted. Is it the furry thing? Is it the furry thing? No, he wanted to replace pregnant women with synthetic wombs. Okay.

And like, was posting about that and was like very confused why everyone got mad at him. Okay. So this is exactly where we need to go next because Robin Hanson, you know, prediction markets, libertarianism, bitcoins. really into AI cryogenics. In 2018, he caused quite a bit of stir when he wrote on a substack, where else? A post that I will share with you right now titled Two Types of Envy. And it is basically a sex distribution argument, like applying market economics to the access of sex.

And I think you can kind of tell everything you need to know about this post by the two updates he added after it was published. The first one reads, though the news article I cite focuses on male complaints, my comments here are about sex inequality in general applied to both men and women. Not that I see anything particularly wrong with focusing on men sometimes. Let me also clarify that personally I am not very attracted to non-insurance-based redistribution policies of any sort, though I do like to study what causes others to be so attracted. Then another update added a few hours later.

A tweet on this post induced a lot of discussion on Twitter, much of it which accuses me of advocating enslaving and raping women. Apparently, many people can't imagine any other way to reduce or moderate sex inequality. And then in parentheses, redistribute means change the distribution. And so his post is basically arguing that like the access to sex, specifically for men in his post, should be treated as sort of a commodities issue and that we need to sort of deal with the inequality of sex distribution in ways, basically. It's a very, I'm not advocating for enslaving and raping women T-shirt is raising a lot of questions answered by my T-shirt. Yeah. Yeah.

Yeah. He is a markets guy that can really only see the world through markets. He believes that markets are the only way to sort of deal with anything. And this post caused a lot of trouble for old Robin Hanson. In the New Yorker, Gian Gia Tolentino described Hanson, Hanson's substack post as flippantly dehumanizing in an article titled The Rage of the Incells. He was very surprised by that reaction. I guess he could have used a prediction market, but he didn't. Like the thing that I think about when you say all this is that this type of person has only become more central to like essentially like power via the tech world, via all this AI stuff. And also just like the ascendancy of the of like that kind of stuff in in culture. And it's like that like that coldly rational sort of like I don't know why everyone is up. upset here if we just force women to do, you know, to give their bodies out based off of, you know, this weighted exchange instead of values. Like I don't understand why everyone is freaking out about this.

This is, this makes sense. And it's just like, it's these people who like think that they are seeing the matrix, but like they are so ported in on this one thing that they actually like, they, they just don't like grapple with the fundamental part of like of being human like I'm looking about this the futarchy thing and like the idea of like I'm looking at its very stupid Google summary of all of it so it's probably riddled with errors but like the idea that like people in society are using their real money like their money to bet on these different like what is the best thing and what should win skin in the game being able to do this thing one of the

reasons why people like proponents favor it is that it gets money out of politics but like no that it's just i just turned into money politics is just money like politics is is is a market like i don't you know like yes it gets rid of lobbying in the sense that like you don't have these outside interest groups but like no you have turned it in into an actual game um and i just think it's like it's just interesting because i think when gio probably wrote that that in cell piece Like, my guess, if I were to go back and read it, it's kind of like, here are a bunch of like edge lord weirdo freaks coming from these different corners of the world who have some kind of, you know, light influence and have these super weird, either like reductionist or rationalist or whatever kind of bad ideas. And now that's just like to some degree like a dominant culture. We just live in that world now fully. So I went on a vacation a couple weeks ago. Thank you.

Congratulations. Humble brag. Humble brag. And I had enough brain space to finally start reading books again. And one of the books that I picked up, I'm still working my way through it, but it's titled How Europe Underdeveloped Africa. It's written by a historian named Walter Rodney. And it's interesting.

It's published in 1972. Rodney was killed because of the book afterwards after it was published. It's a kind of Marxist historical analysis. of capitalism starting from 1500s Africa and sort of, you know, thinking about systems that way. And AI has been on my mind as I'm reading it and thinking about systems and thinking about like what AI means, you know, in the evolution of capitalism, like what does it mean to these guys? And the conclusion that I come to more and more often is that like these guys that we're talking about basically just like worship capitalist markets to such a degree that like,

Like they can't really think beyond them. Like it sort of colors everything they think and how they see reality. Here's another like tweet from Hansen in 2019 that I think is important to point out here. He wrote, slave owners did many bad things, but each owner didn't do every single thing. Like these guys are trying to paint themselves as these kind of like living in the abstract. I'm going to solve problems just by like how we could solve them and think through these like thought, you know, games. but it's almost always as a way to run defense for the free market and capitalism. Yeah, and like you can see this in like the lot, like this logic has won in so many different ways,

even with people who aren't fully like this, like full prediction market weirdo. It's the water we all swimming. Yeah, like, you know, I saw something the other day with the whole Barry Weiss 60 minutes firing, people thing and people being like, this was all, like Scott Pelly stood up to Barry Weiss and the CBS executives at 60 minutes because like clearly he's just trying to get like a big independent substack media thing like making all. And it's like these people could not see a decision being made outside of the realm of like a broader five-dimensional chess. Yes.

You know, money calculation of like how can I be worth more to, you know, this market? Like, how can I get Scott Pelley made like $5 million last year? You know, like this guy, they can't see somebody at the end of their career standing up to power because they don't like the way that it is managed and treated this, you know, this thing that ostensibly he cares very much about. But it's like, it's very telling you just saw a ton of that from this type of person on the internet, just being like, yeah, we can all see through your your play. It's like this total cynical. it's all about what I can make or like how I can increase my value on the free market. Yes. Sort of situation.

And the internet I think is at this stage of it becomes so corrupted by that kind of thinking that it is actually beginning to break social media. I mean, I've written about this recently, but we are, you know, nine or 10 waves in of discourse cycles where people are like, this thing that I saw my feed isn't real. a marketing stunt and then or discovering that this thing that everyone thought was real was a marketing stunt and it's like both are poisonous because everyone just believes that everyone's on the take now and it actually makes me kind of sad this entire line of thinking that like things are somehow more pure because money is exchanged like I actually can't even wrap my head around it like it's not

it's just not part of my DNA to think that way I will say though going to these markets I don't really respect to the point of view of Polymarket, right? But compared to Calci, like, polymarket is much more hardcore with what they'll allow people like, what they're like, we're fine with the war markets. You know, Cali's like using like running billboards in Washington, D.C. that are like, we don't let you bet on war, you know, and it's like, oh, I love when a company takes a stand like that. That's beautiful. But the one thing that when people do, you know, ask these moral questions about prediction markets, polymarket is very much of the mind,

or at least projecting the ethos broadly of like, insider trading is our advantage, right? Like these markets get good when you have a guy in the Pentagon being like, how do I make $400,000 real quick off of the fact that in four hours, you know, we're going to like drone strike, whatever, right? And I can at least see the rationale there, right? Like that is like that is the most stone cold, cynical, like, listen, that is intelligence. If you can convince people to betray their, you know, their classification, their government clearances because they want to make some money, it's absolutely cancerous for broader society.

But that is actually making the prediction market like into a source of Intel, like what we were saying before. I think that that is the is the is the is the logic like the cold logic what you're talking about where like I think a lot of these places are going to go. Charlie, aren't you presupposing like a linear bet? What do you mean by a linear bet, I guess? Well, I don't really know what the term would be. But like, okay, so like let's let's take your your Pentagon analyst that knows that we're going to bomb Iran. at 8 p.m. on Saturday. There is one version of the bet where you bet we're going to bomb Iran at 8 p.m. on a Saturday.

But couldn't you use that insider information to like short the market? I think the most likely outcome is using it again. I'm not a great. How are you using? How are you insider? How is I doing it? Yes. When I do a polymarket bet of what your word count on your next story is going to be,

how do you know, to follow? follow that, you know. Well, you can, I theoretically, I could imagine you could hedge, right? So what you could do is you could make the bet on the thing that you know about, right? Yeah. But in the event that information changes, you know, Donald Trump sees something on true social, decides to do something completely different 10 minutes later, but you've already locked in your thing.

You could probably hedge it in other bets. Like this is a thing that you're starting to see now, like these companies are even saying that this is like one of the uses for prediction markets is that you can bet on certain things to hedge outcomes in in your life right like someone was talking about using this with like the weather right where if if you have a if you have a bet on a like a sporting event or something happening you could bet on that thing but in the event that like it gets rained out or something like that you could also make a bet on like the weather that's a pretty that example, but like this idea that these everything can interact with the other thing.

And that is, I think, ostensibly how you could do something like that. I had a buddy whose first job out of college was a data analyst for a weather futures company and basically buying and selling weather data to insurance companies. So they could use it as a stock market for like agro companies. Right. That would be even that would be a better one right. Like bet on like like basically like use it to bet on like commodities and then use the prediction market to hedge that thing based off of, you know, betting on a drought or something and betting on like, you know, sorghum futures. Or causing a drought.

Um, after a word from our sponsors, we're going to talk about the different kinds of markets that, you know, are at play here because we've mentioned them a bunch, but I want to sort of define what makes them differently, what makes them special. But first, a word from our sponsors, Barstool Sports. So we've been talking about Calci and Polymarket. The major difference, CaliChi can't bet on war, got to use real money. Polymarket is crypto-based. Cali was created in Manhattan by two financial analysts around 2018.

Polymarket is also, I think, now based in the U.S. Yeah, and the major difference, Polymarket, you have to use cryptocurrency. And the third company I want to bring up here, which we haven't mentioned yet, is steak. Are you familiar with steak? Only because they're very involved in like viral video distribution, right? Yes. So they are the, they are an Australian Kurosawin online casino. They are owned by Medium Rare NV and Medium Rare NV also owns KIC.

and kick is the kind of like, it's where clavicular is. It's the renegade live streaming platform. They don't do prediction markets, but they do flood the internet with viral content and support it via gambling, which I would say over the last four or five months has kind of created an alternate structure for prediction markets where it's like gambling is going directly into internet popularity and creating like cultural. moments in a really strange way. It's so it's not like you're betting like clavicular is to become famous, but

clavicular's fame and gambling are intrinsically linked. Dude, that little monologue you just did, like we live in hell. This is the worst possible outcome of all of this. Yeah, it's really bad. Clivoc, like, you know, it's the butterfly effect of like somebody opens a casino in Curacao and like this dude is just running people over with the cyber truck 14 months later, right? It's like, Jesus.

Well, what's really interesting. I mean, like, yeah, what I say interesting, but is yeah, what's really horrifying is like people are debasing themselves on live streams to generate revenue and receive revenue from a casino. They should do a prediction market and just let people bet on what they're going to do to themselves on a live stream. Kick spending so much money in the whole clipping game, right? Which is then, you know, the clips being used to populate.

all these different social networks, which is then, I know there's this huge debate. You've written about this, like, the idea of, like, what is popularity? But that aside, like, this idea of creating essentially your own organic or inorganic popularity, but that it's being funded by this casino, you know, like, that's why they have, you know, millions of dollars to spend on, you know, allowing people to paying people to clip clivocular and Nick Fuentes and a nightclub or whatever. Like, it's all when you see the money being connected in that way, you're like, oh, God. It's not that this guy's not popular, but like look where it all came from, right?

Yeah. Did you watch Cleveicular get a nose job on live stream the other day? I did not. I did not. Yeah, they just did it right there on kick. And what I think is really fascinating. I thought he was done live streaming for his mental health. No, he stopped taking steroids because he wants to become fertile enough to have a baby.

But he is streaming still. I think a baby will solve all of his problems. But now he's grandpa. maxing as he's losing like his his weight but now but he got a he got a nose job to sort of to try to stay to try to keep his his his ascension rank up it really makes me think of like there was a lot of when the truven show came out i was i was reasonably young but there were a lot of people like man this is like the saddest possible version of whatever and like the truven show is the pleasantville version yeah i would like they could not like you could not have imagined actually how bad it's going to be when the guy just turns his life into a full-time reality show. Yeah. And for all of the talk about prediction markets, predicting behavior, what is so funny about this is that it is creating a lot of behavior that we did not predict. And it is influencing human behavior. And here are some recent examples. So in February, Kalshi revealed

that there was an insider trading case involving Mr. Beast editor. Do you remember this? Slightly, slightly. So let me spin through this. This is from an NPR piece. The Mr. Beast employee, who Kalshi identified as Artem Kaptur, in regulatory filings, traded around $4,000 on markets related to the streamer. That's not that much, actually.

Many people place wagers about Mr. Beast on Kalshi. People bet hundreds of thousands of dollars on what he will say in his next video. There are markets on the number of subscribers he will bring on this year. And people are betting when exactly Mr. Beast will get married. Cali, investigators say Captoor was using proximity to the streamer as a way of trying to make quick cash. Then there was the incident about a month later when, do you know about the weather

tampering device? You were talking about the weather earlier. The weather tampering device in France? No. Well, once again, this is from an NPR piece. authorities in France are investigating possible tampering with a weather monitoring device at charl de gaul airport in paris after an unusual temperature spike was recorded around the same time a polymarket trader cashed in basically this guy like went up to the weather like reading machine

with a blow dryer and blasted it real fast to like win his market honestly that's just that that's admirable like that's just good old fashion like work ethic right there i think he's a hero i do think if you do a crime that doesn't hurt anybody and it's really funny like you shouldn't like you get maybe probation like just like you can't you can't do any shit here's here's i'll say i think if you do something that can be reasonably classified as shenanigans if you don't get up to any shenanigans for like six months like you shouldn't have to get punished i think the shenanigans defense yeah of course or we like take away we take away access to like your social media accounts for six months right because it's like that only increase shenanigans you get back you get

Or you have to like read a book and do a book report or something. Like you got to like, you know, just like chill for a sec. I would classify this next case is not distinctly not shenanigans. This is a so in April right after the weather tampering, a U.S. soldier was charged with using classified information to bet on the removal of Nicholas Maduro from Venezuela. And you would sort of talk about the hypotheticals here and this is really interesting. He was placing bets the total. around $32,000 that Maduro be out of power and he ended up making about $400,000.

Yeah. So once again, if you're listening and you're part of the U.S. government and you want to do insider trading, I would say try to do that like the opposite. Like don't bet on what you think is going to happen. Use your insider knowledge to make other kinds of less direct bets, you know? Why? This is not financial advice. No, this is.

This is financial advice. Oh, and then, of course. most recently, Queen of Queens, George Santos is being investigated for insider trading on college. Which that guy, too many shenanigans. I think that he's just too many. What a scamp. What a lovable scam. He was also, it seems like he was bet in bank. He was betting a lot on like who would attend the state of the union address, I guess. And, you know, I don't really know much about that story, but I'm going to say like he did that. Like I actually don't have any problem saying that.

you know, that sort of takes us to where we are now, which is this casino world that is a nightmare, as you said. I want to know more about this stuff, but I also sort of find it like weirdly boring to talk about. The part of it that is always interesting is who's who's up to what, right? Like being able, like as a reporter, before those stories, some of those stories broke about the, you know, the Maduro guy in the military. Like I was hearing chatter from people in Washington being like, I know that this is happening. Like I can't. I don't have proof, but like I know this is going on in these different places. And that to me is interesting.

But then once it happens, it's like, yeah, okay, this is happening. To me, what I think is really interesting is this broader, like, a little bit of what we were talking about earlier, but this broader theory of attention and the financialization logic. And this is something that I think kind of goes throughout everything in culture, politics, and media, sports, which is this idea of like, you cannot sell a product anymore in today's like attention economy. like you have to sell some derivative of it. Like it's just too saturated to make any good money selling any kind of product. Right? So you sell instead like a financialized part of it. So in sports, right?

I was talking to Max Reed about this a while ago. And he was basically saying like, I think we've reached, you know, like peak sports, right? Like the distribution deals, the TV contracts, all that different stuff shows that we have reached like a real saturation. Like people are getting the. most out of sports that we can in this moment. The coverage is what it is. And sports betting has created a derivative of sports, of these games, right? In the same way that like you package a bunch of subprime loans together into this like

tranch and you call it a credit default swap or whatever, you're taking these elements of a sports game, right? So like how many free throws are the Knicks going to make in the third quarter of the NBA finals game two, right? And you can bet on that and you're selling to fans is like, yes, you may not be as interested in the NBA as you were, right? Because it's become saturated. It's become this thing. They've messed around with the three point line, blah, blah, blah, blah, blah. But here's this thing we can sell you, right? Because that is easier. It's more interesting. It's more attention getting all of that, right? And it is this way of like commoditizing that. You see the same sort of thing, I think, in politics, right? Like, we have

reached peak politics in terms of just so much attention and people becoming obsessed with this stuff. So like CNN is partnering with Kalshi in order to pull this type of like information so that Harry Enten can go to the big board in the middle of the day or on, you know, whatever the 7 p.m. show and talk about how all these markets are playing and doing. And that is a derivative of a political race, of the horse race that you can then sell to people. And I just think it's like this is what is happening in this like age of just like crazy saturated. Everyone is addled by the internet and it's so commoditized that you have all these people finding these weird ways to sell you something, even if that's just like getting you to pay attention

so you know, you can sell ads. I don't disagree with that all happening. I think that's actually the correct diagnosis. But I do. I do. want to push back against the concept of peak. Sure. Because I think it's self-imposed.

I don't think that we actually are at peak politics or I can't speak for sports, but I watched the next game this week and like, you know, I don't think there's, I don't think there's such a thing as peak Hollywood, peak sports, peak politics. I think it really comes down to we have built this system that is keeping a lot of people in power, whether financially or politically or with attention. and they refuse to let go, and we have no mechanisms for making them let go. And so it's not so much that like these specific things, like there's no more, like, I kind of think, like, let's go with basketball.

I kind of think the game of basketball is like infinite. Like you can kind of figure out like whatever you want to do there. In fact, like the biggest growth, I think area for the NBA right now is the WMBA because they're like, well, there is an entire other gender that like might want to play, right? I would watch NBA babies. Sure. Like, you know, you can do as many spinoffs as you want. I don't think there's such a thing culturally as peaks.

I think when we say that, what we're talking about are like, we are in a system run by the same people who have basically been running that system for most of our adult lives. They refuse to let go. And then you start to run out of space. And so prediction markets and AI and video slop and all the rest of the horrors of the modern age are basically just them like tearing off small. and smaller pieces of the loaf of bread to like keep us satisfied because they don't want to let go. I have to keep telling myself that like things don't have to be like this and like prediction markets are just like the simplest way to get you to literally buy into the perpetuation of the system that we're all stuck in. I think that's a really good point about the peak nature of it.

What I'm trying to get at is like the extractive quality, right? Like yes, maybe maybe the resources are infinite, like the well underneath it is somewhat infinite in terms of like you can, you can pull stuff out of whatever piece of culture or sports or politics forever. Like interest is going to continue. Yeah, yeah. But the difficulty of the extraction, it gets a little bit harder. And the thing that you are selling to people becomes a little bit more abstract each time, right? A little bit less pure.

And I think to the point of absurdity, crypto is a per- like, NFTs are a perfect example where it's like, we have no culture left to give you. You can buy a facsimile of that culture. And then you can use that as a speculating, like a speculation market. Prediction market, same idea. You could buy into the possibility of something happening, which is just absurd. I think it stems from the logic of, and I know, you know, things weren't invented at the, you know, in the year 2000 or anything. But like, it stems from the logic, the financialized logic of these investment banks and

these these organizations that have found this way, like the hyper-capitalism portion of all of this, right? And then post-2008, the idea that like, oh, you can do this and you can't really get in trouble for it. Yeah. Like there's no problem here. Like there isn't a societal pushback in a huge, huge way to, you know, creating these package derivatives, right?

Like, oh, yeah, we'll take the thing that we have and give you this, like you said, like strip off different pieces of it, mix it all around, put it together, and then hand it to you. And it's like, oh, it's different. Sure. I'll take a bite of that. I think that it is all following that type of logic because it is lucrative and there's really no consequence to giving it to people. To go off on like a pretty insane tangent, but I

swear this matters. I recently went to see the movie Backrooms with Panic World researcher Adam and we were talking about afterwards and he said something really interesting where he's like it was so nice he said it was so nice to see a 21st century movie because we're basically only ever shown 20th century movies and how like everything in culture still feels extreme like to him because he's like he's Gen Z he's like everything around me feels so 20th century that when I see something that looks 21st century, even if it's not great, I'm excited. And that has sort of been worming its way into my brain over the last week of like, right,

like I had this conversation with my girlfriend all the time where I'm like, if we're sitting on the couch and we're watching TV and we look around our apartment and you close your eyes and you imagine doing that exact same move, but it's 1999, I guarantee you it's almost exactly the same. The devices may have changed, the amount of quills. chords in the room may have changed, but it's not like a fundamentally different shift the way it probably would have been if you were 30 in 1930, right? You know, you're 35 and 1930. You close your eyes.

You're like, well, I grew up outside and now I'm inside, you know, for a large chunk of the population. But for the majority of the American population, life hasn't really changed that much since like 1999. Like even in terms of clothing, like for the most part, that is sort of what I'm trying to trying to get at when I say like, this is all self-imposed. Like this is an entire class that is making us live in a perpetual, you know, end of the 20th century.

What's so interesting about you bringing up the movies part is, well, I was thinking about all this, this, you know, derivatives thing, selling you the derivative of the thing, right? I was thinking about this was a while back, but traditional movie marketing. There was that, that movie that came out with Robert Pattinson, Jennifer Lawrence, right? Two big, like, A-List Hollywood star. They're, like, married and she's, like, having a bad time, right? I don't really know, but it sounds right.

Anyway, kind of a grim movie, apparently, but the marketing of it, they spent all this money and all this stuff. Die my love. Die my love. And they went to Vanity Fair, whatever, and did all these, like, you know, viral moment things where it's like Robert Pattinson and Jennifer Lawrence are interviewing each other with some weird card game thing, right? Like eating hot wings and playing with puppies.

and doing a lie detector test. And doing all these things that are part of like the movie marketing junket right now. Yeah. None of those things. I was talking to someone who is, you know, sort of tangentially involved all this stuff. None of those things mentioned the movie at all. They were literally just clips of stuff to give to people to be like, these are charismatic people. You know you love them.

And hey, at the end of it, oh, there's a movie in theaters. It wasn't what the movie was about. Wasn't anything. And it was like, oh, huge surprise. Nobody went to see this movie. Well, the movie, I just looked at it. The movie is about a woman spiraling into psychosis following postpartum depression. So I imagine the like, let's play a like icebreaker game YouTube clip didn't really work for that.

Right. But also the thing is like they were selling this like attentional derivative, right? Like they were selling themselves in such a this way. And then you look at something like backrooms, right? And I think a lot of people have the sort of origin story. It's like too tidy or whatever. And there's like, oh, it's like YouTube on the big screen or whatever. But it is something that is like based around a huge part of a culture that a bunch of people have access to understand, like they're primed to want to go enjoy this thing, see a different representation of it.

And they're like, I can't like people are taking already taking the wrong lessons from this. Right. Yeah. The lesson is what Adam was saying, which is that like this is something that is like a piece of culture that like. I can like ping off of, right? Like we're vibrating on the same frequency. That's what gets people to go out of their homes and see a movie. But this other idea is like, oh, it's just like, you know, YouTube's going to make movies now.

And I think it speaks a little too. Like it wasn't selling a derivative of a culture thing. It was just selling something new or it was selling something like, you know, unique in a certain way to a unique set of people. And I think that's what resonated with me. when you're like, we don't have to live in this exact continuum of this exact thing of like, you know, IP billion trillion sequels, this type of thing, because that's part of the financialization logic. To loop us back to where we started with today's episode, in the early 2000s, there were a whole

bunch of weird guys that appeared kind of right after 9-11. And they were like, you know, they had a bunch of sci-fi utopian ideas. but if you drill down into almost every one of those ideas, it is actually the same thing, which is we are promising you that we can put the entire 20th century in Amber and you can manage it. If we're talking about AI, if we're talking about crypto, if we're talking about prediction markets, it is all the same thing, which is to use the term you're using, we're going to chop up the 20th century into derivatives and we're going to convince us. people to buy into it and pay for its perpetuation.

So there won't be new things, but you can pay for the luxury of having the old things sold back to you. Or in the example of prediction markets, we're not going to fundamentally make sports an easier thing to enjoy or watch or go to. But if you want to count up the amount of dunks that could happen in a game and then make some money on that or more realistically lose a lot of money on. on that, that's a form of entertainment that you can do for cheaper than it would be to actually go to a game.

And it would be easier because you can do it from your phone in the bathroom. And like that if everywhere I look now across the entire cultural landscape, it is just that business model over and over and over again. We're going to sell you an echo of a thing that should be fundamentally overhauled for a new century, but we're not going to do it because if we did, we might lose power. Not just culturally, man. What is, is make America great again? Oh, no. I'm in politics as part of culture. Yeah, across all of society. Like look at the freaking White House X account. It is selling you like, you know, a very white nationalized version of the 20th century. Yes. Yeah, it's it's

everything. It's everywhere and it's everything. And it is it once you see it, you see it everywhere and then you start feeling very suffocated by it. And I think whenever I think about prediction markets for too long, I start to feel kind of crazy where I'm like, we all could just not do this. But they're preying on sort of like these base instincts of like, you know, the, the addictive nature of gambling, the all-consuming nature of attention, whether you're giving it or receiving it, like the base instincts of, you know, racism or misogyny or whatever it is. Like they know the buttons to push. And I just want to get in on the action. I'm tired of being a cultural critic. I want to get in on the next one of you. So I'm trying to

think of what could we chop up from the last century and sell to people in bits and pieces that would sort of prey on the most mentally ill and vulnerable members of our population? Journalism? No. There's no fucking money in journalism. No, but I think you just actually really hit on it where it's like it's selling that you get to be a part of the thing that they're saying is the thing that is really happening, while everything feels dead in the water is also a big factor to this.

Yes. But I don't want to lose focus to it. Charlie, what can we do to make money here? Because that's all that matters. I don't want to make anything new. I want to sell what has already happened to an audience. I think it's Furbies, Tomogachis. My mind is going to like the AI moment right now, right?

And as you were talking about this, I was thinking about something someone told me the other day about the AI booster, seeing their own reflection and like getting scared, right? And one of them is like the way they're like, look, all of this stuff just repeats what we have been talking about forever, right? Like the sci-fi stuff, like this is like, this is SkyNet, this is all this stuff. This could actually happen. And they're like, and it's crazy that like we just, you know, built these models and this is what they're producing.

It's like, dude, it's all fucking trained on all of that information. You basically just built the thing that like including all the stuff in the past, right? Like it's very odd. There's no ability for them to see like, no, we made this because of the culture. And of course, that culture got mashed together and created this thing that seems like, you know, it predicted the future. Like there's no, to bring it back to like prediction. Like it, we didn't predict AI.

We just created a lot of science fiction. A lot of people got like pimples. off that science fiction and then built the thing, you know? And it was trained off of all of that science fiction. Like it's totally looped. It's totally circular. It's yeah. I think you and I have had had very similar experiences during this era.

But between like 2003 and 2013, there was new stuff happening like all the time. And I remember the feeling of like genuinely seeing something new and being like, whoa. And now when I see something that is purported to be new, it is a different feeling where I'm like, not really new. It's just sort of like a rehash of a thing that I saw. It's like kind of different, but it's not like it's not the same muscle memory feeling of like, whoa. Like I, this sounds so silly, but I remember the first time I opened four square and I was like, I've never seen anything like this before. The first time I like, I don't know, used Twitter during a breaking news event. The first time I like downloaded music onto an iPod, the first time I used Google Maps rather than

printing out MapQuest. Like I remember newness and I feel like the further we go, down this road, like the harder it becomes to remember newness. What's funny is that a lot of people would be like, dude, I, you know, I vibe coded a website or whatever thing or I have agents that are doing this thing. Like, like, Claudebot felt genuinely new to me. That actually blew my mind. I agree that it, that if they felt new and it did that stuff. What's interesting about that, though, is that it's like, it's like a total outsourcing. Right. So it's like it is, it is new, but it's new in the way of like, I don't have to, like, I give, I give up on this thing, right?

Like, transferring all your music to an iPod and carrying it around with you is getting rid of a certain type of friction, but it's also not like, oh, this machine listened to music for me and gave me the memory of like having listened to music, right? Like, that's not, that's not what is going on. And there's a little more of that with some of the AI stuff. It's just like, no, I'm just not going to do that anymore because these machines are just going to try to do that for me. It's interesting to think about that and then to link it to, you know, a lot of people talk about, like the economist, Kyla Scanlan has a lot of stuff about, you know, the path of predictable progress being kind of erased in this financialized world. And like, you know, especially for younger generations and this idea that, you know, they, in that system, it is a rational response to create a, bunch of polymarket accounts or invest in crypto or do these types of things because you are essentially you are hedging against reality and then you know the nature of of not being able to

earn as much as your parents or not have access to you know whatever the american dream or a home or whatever and you know I think about that world which is caused by all this financialization that people feel and also the stagnation that you're talking about with like not having these these new experiences. And it's like, no wonder the consumer confidence vibes and all of like the vibes about how the world is going are so awful, even if they're not necessarily reflected in all the economic data or whatever, right? Like there's this huge debate always between like the vibe session and what's really

happening. And it's like, dude, just put all of these forces together. People who are just stuck consuming. a less pure experience that's being repackaged and sold to them with higher consequences without access to these new things, it's going to feel like shit. Like, it's just going to feel awful every day and just kind of like, all right, I guess I'll just, you know, continue to distract myself in whatever way. Yeah, I think that sounds cool.

I think I'm into that. I think that's good. We just have to monetize the bad feeling. Like, that's what we have to do. Yeah, I agree. That's how we get it. That's how we make our money. Like, we have to, like, can we use despair to power data centers, right?

Like, can we turn it into energy to fuel artificial intelligence? And I think that that is how we end up on the mega yacht. I think you actually came up with like the perfect business model, which is that it's some kind of service where maybe we cut open your head or it's like we stick something in your ear to trigger an impulse in your brain, but we create the false memory of enjoying a piece of art. So you don't actually have to do it. But you remember that, like, you have a memory that, like, that was good.

And we could probably create like a gambling situation where, like, you could gamble on what kind of experience you want to have a false memory for. So it could be a bad one, you know, but it could be a good one. Right. So I'm going to get to work on that. And in the meantime, I'm going to raise capital by attaching my AI agent to polymarket and just try to make as much money as I can. But I want to thank you for coming on the show,

joining our three-timer league. Charlie, every time you come on, I feel like my head's spinning her off my shoulders. And it's a great conversation. If people want to follow you on the internet, where can they do that? I'm on all the usual things, Blue Sky.

I did resume, sadly, posting. I see you on there. Yeah, I feel like either I lost a complete and total step like and I can't post on that platform anymore which is very like I'm very willing to entertain that I'm watched but I do also believe that I'm being effectively shadow banned because like it is impossible to get engagement on that platform in in the Elon Musk era unless you're like you know hosting AI hype slop or like white nationalist memes so and paying for it and and paying for it which I think is ties into the theme of today's episode

but I host a podcast called Galaxy Brain uh that is I I would say, you know, very complimentary in topics to this one. It's not a zero-sum game. So you can find me on. Your newest episode interviewing the CEO of Dropout was great. Unbelievable. Sam is a genius. And yeah.

Panic World is a production of Courier. It is written and produced by Grant Irving and hosted by me, Ryan Broderick. Josh Fielstead is our production coordinator. And our amazing researcher is Adam Bumis. From Courier is Shane Verkes. who edits our video episodes, along with our producer, Kevin Maroney and National Managing Director and Executive Producer Kevin Dreyfus. R.C. DeMezo is their VP of Brand and Social.

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